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Nigeria’s depositor protection body has said that the country is monitoring the risks associated with digital currencies.

According to a deputy director at the Nigeria Deposit Insurance Corporation (NDIC), Kabir Katata, this is ongoing process is being done with a view of resolving concerns that may arise with regards to protecting the general public.

“We should continue to monitor developments in digital currency so as to resolve any concern on legal, financial and consumer protection,” said Katata as initially reported by The Punch.

Katata, however, noted that the concerns were not limited to Nigeria and were evident across the globe:

“Regulators in the financial sector are showing concerns over the risks that are associated with the digital currencies, which is a new phenomenon in many financial institutions … That is why regulatory/supervisory authorities in many countries are seriously concerned about DCs [Digital Currencies].”

No Risk to Global Financial Stability

The NDIC deputy director also pointed out that digital currencies do not pose stability risk to the global financial system though they raise other concerns such as ‘consumer and investor protection, market integrity and money laundering/ terrorism financing’.

At the same time, Katata also revealed that both government agencies and financial institutions in Nigeria were exploring blockchain technology as it has the capacity to drastically transform the country. According to Katata, distributed ledger technology has the potential of ‘reconfiguring all aspects of the society and its operations’.

This is not the first time that the NDIC is expressing its views on cryptocurrencies. As CCN reported earlier this year, the regulatory body mandated to protect depositor funds warned that investments in cryptocurrencies were not insured by the NDIC as they were not issued by the Central Bank of Nigeria (CBN) or any other country’s reserve bank.

At Your Own Risk

A year ago, the NDIC had issued the same warning saying that Nigerians wishing to invest n cryptocurrencies were doing so at their own risk while noting that there was no plan to prevent citizens from purchasing cryptocurrencies.

Nigeria’s central bank also holds a cautious stance on cryptocurrencies similar to that of the NDIC. In January the CBN governor equated investing in bitcoin to gambling.

“Cryptocurrency or bitcoin is like a gamble, and there is a need for everybody to be very careful. We cannot as a central bank give support to situations where people risk savings to ‘gamble,” said the governor of CBN, Godwin Emefiele, at the beginning of the year as CCN reported.

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